Scotland's Property Scandal BBC Scotland Investigates

There are 200,000 people working in the building trade in Scotland. But

the building trade in Scotland. But can you spot the professionals from

the cowboys? I'm in Edinburgh, a city renowned for its magnificent

architecture. But I've been looking at its attempts to conserve these

buildings and I've uncovered allegations of fraud and

institutional corruption at the Edinburgh has some of the most

historic buildings in the world. But could an attempt to save that

history sometimes be hastening its decline? And ripping off ordinary

scots at the same time. In Comely Bank near the centre of Edinburgh,

that's what Bruce Thompson thinks. We had a minor roof leak, which we

were quoted around �760 by a contractor. But to make sure all

his neighbours were happy and to make his historic tenement

watertight again they called an officer from the council. He had

one quick look at it and decided that it probably needed a new roof

and would report back to his boss. And the next thing we heard we had

a Statutory Notice telling us that The power is unique to Edinburgh.

Other places have statutory notices but this specific power is unique

to Edinburgh. The statutory notice Bruce is referring to is a power

that only the City of Edinburgh Council has, to keep its unique

buildings in good order. A superpower if you like. It means

owners have to pay for the work stipulated by the council whether

they like it or not. But back at Bruce's, it seemed the builders

weren't just on the roof. Work went on and on and on, more and more

scaffolding kept appearing, and we began to get a bit worried. As it

turns out, Bruce was right to be worried. The council decided his

building didn't just need a new roof, but a whole load of other

work. We just kept seeing great big chunks of stone being carted up

onto the roof and the contractors were polite and civil. We didn't

have any problems that way but they'd obviously been advised that

they weren't to speak to us about anything. There was certainly no

communication at all about cost. And we received a letter and it

tells the surveyor quite clearly on no account give these clients any

indication of cost as they do change day by day. So you were

expected to effectively have your cheque book open and let somebody

else fill in the numbers? That's what it seemed to be like, yes.

frustration, he used freedom of information laws to ask for details.

He felt it was the only way he could find out what the builders

were doing to his own home. Finally he received files and files of

paperwork. But they weren't exactly enlightening. This is edited,

blacked out to the extent that there's literally nothing to see,

page after page of it, I think. Another one, another one. I mean, I

don't know what they think they're going to give away, but it is just

stupid. Some of the Freedom of Information responses literally

told him nothing at all. But tucked away in the papers was an email

from a council official, describing Bruce's attempts to find out about

the work at his own home as a moan letter. When you saw this?

Horrified with that, horrified. And we sent that to the Chief Executive.

Do you feel that's a respectable way to treat someone? I feel it's a

disgusting way to treat anybody. The council now admit the email was

totally unacceptable. The Council decided to use its unique Statutory

Notice power once again. This time to get builders to overhaul the

back wall at Bruce's tenement whilst they were fixing the roof. A

job costing tens of thousands extra. It's not evenly done, it's up one

side not the other side. There's cracks all-over the stonework.

Bruce says he was told it would cost around �760 to fix the leak.

But after the council got involved his bill leapt to more than

�300,000. Almost a third of a million pounds.

On a scale of one to 10, how happy are you with the work that has been

I hear of another case across the city where the council have put a

statutory notice on the building. It's left the owners no choice

about what work is getting done. It turns out Emma-Jane Condon has also

had a leaky roof in her tenement. lot of times I'd get home and I'd

look out there with all the green meshing hanging down and just think

it was never going to end. Emma- Jane and her neighbours were told

they could expect a �90,000 repair bill to fix the roof. But then

curious things started to happen. So I was in here and the banging

was going on and I saw that crack appear. The council had been using

their superpower again. Emma-Jane got another statutory notice and

then another and another allowing the builder to do expensive

stonework. Scaffolding went back up. Sandstone stripped out from the

walls of their building started appearing in the skip. The trouble

was by the time we'd realised what they were doing they'd taken half

of it out. One of my neighbours who's experienced in this kind of

stonework - he works on buildings as an engineer - had looked at some

of the stonework in the skip and it was his view that there was no need

for that stone to be taken out of the building. So, they were taking

out perfectly good stone and replacing it with hew stone,

unnecessarily. When the scaffolding came down, the building appeared to

have been given a makeover most of which, Emma-Jane believes, was

simply cosmetic. The last we heard about the total cost of the

sandstone was it was a quarter of a million pounds. I think that what

they've done is seen this as an opportunity to do a Rolls-Royce job

on a building that wasn't necessary. And we can't afford the Rolls-Royce.

Emma-Jane and her neighbours expected a bill of around �90,000.

It's now around �300,000. I don't know if the ultimate conclusion of

this will be that I'll have to sell the flat because I can't afford the

I wanted to know if these bills could in fact be the real cost of

what was needed to be done. Was it possible that the owners simply

didn't want to pay? So I called in a couple of experts to look at

Gordon Murdie has been a quantity surveyor in Edinburgh for 38 years.

He has detailed experience of the statutory notice system and is used

as an expert witness in court. John Addison is a conservation engineer

brought in to work on high-profile projects across the country,

including Historic Scotland buildings. This is Bruce Thompson's

situation, he's in Comely Bank Place. John, you've taken a good

look at this property. assessment is that probably 95% of

it wasn't necessary. It seems that they got a little bit carried away

with themselves. It certainly surprised me that work on that

scale should have been carried out. The contractors said that they were

instructed to do all this work by the council. At Queen's Park Avenue,

our experts examined Emma-Jane's �300,000 worth of work. I just

wonder if they'd had a conservator to work on some of these features

up there, trying to reproduce that. Looks a bit rough. As well as

examining Emma-Jane's building we showed them a survey done six years

before the first statutory notice. Our experts say it gave no

indication major works was needed back then. They talked us through

their findings. If I could just refer to this drawing which

suggests the extent of the stonework repair as scheduled by

the council, this doesn't look like �300,000 worth of work either.

asked Gordon to give his opinion on a statutory notice. We asked if it

was clear what work needed to be done. This is an enormous latitude.

Repair, renew all defective and cracked stonework. The first step

at that point is to define what exactly is to be repaired, what is

to be renewed a stone schedule, a marked up drawing, define the costs.

There isn't a single repair noted. So it strikes me as very odd that

you've got an open-ended description of work on the stat

notice, which starts off with the word repair and the record drawing

as we see it doesn't actually have a single repair. Our experts have

found unnecessary work, over- charging even work that might make

a building worse. Driving around the city I can see

how Edinburgh's international reputation hangs on the quality of

its architecture. But perhaps Bruce's and Emma-Jane's were

isolated cases? Well, I've come across dozens of people complaining

about statutory notices right across the city. Each case is more

At Comely Bank Road, thousand of pounds of work was about to be

carried out under statutory notice. But James McLean who's one of the

owners challenged it. He says when he did, the council agreed some of

the work didn't need to be done. In Trafalgar Street in Leith, Bonita

Russell owns a cafe. She's having to close the business she's run for

more than 20 years after the bill for roof repairs soared to almost

�200,000. And also in Leith, on Commercial Street, Jeremy Pascoe

and his neighbours are expecting a It was becoming clear to me that

Bruce and Emma-Jane weren't the only ones unhappy with statutory

I've arranged to meet someone who used to issue the kind of statutory

notices we're talking about. His job was to decide what work needed

to be done, get builders on site and then oversee the work. I'm

hoping he will be able to give me a really good insight into what was

actually going on in the department He told me he had resigned, and he

was worried some of his colleagues were too eager to hand out

statutory notices. Basically, I think too many statutory notices

were being served by my colleagues. It seems some for got they were

serving the public and were too focused object on serving in thes.

As a surveyor your job was to determine what work was needed. I

suspected that builders were leading the job, adding more work,

and the officers were signing off the statutory notice. If council

officials were encouraged to hand out statutory notices, it goes some

way to explain the huge rise we've seen in Edinburgh. Over five years

the value of the building work has soared from �9 million in 2005 to

�30 million in 2010. Some people have got very rich. This money can

be a money spinner. The council also gets a stake. For it is role

it gets 15% of the final bill. If the costs go up, everyone's a

winner, except, of course, the homeowner who has to pay up. But

statutory notices were never meant to be like this. The power was

brought in to protect historic buildings, and to protect the

people on the streets below. In one instant she was with us, the next

she was gone. 11 years ago a waitress serve at Ryan's Bar in

Princes Street was killed after two foot long stones fell on her from

the third floor of the building. Eight people were injured. It

happened in the afternoon when the street was packed. Christine Foster,

from Australia, died in hospital less than an hour later. Her deaths

with a cruel reminder of the importance of looking after

Edinburgh's historic buildings. need statutory notice system, but

we need the right statutory notice system. Not just in Edinburgh, but

across the country. We need to preserve our built heritage, it's

absolutely vital. Ewan Aitken is a minister and the former lead r of

the City of Edinburgh Council. But for the last two years he has been

raising concerns about the way the power is being used. There are

issues about how decisions are made and what constitutes the need for a

statutory notice and then once that's in place how that work seems

to expand and expand and expand, all at the cost of the residents

who have no communication and who end up paying the bill. He says he

has evidence that builders doing the statutory notice work were

lining their own pockets. He claims that 13 addresses were charged for

top quality materials while the builders actually used very cheep

alternatives, more appropriate for a garden shed than historic

buildings. Surely, that would be fraud? A fraud, he says, he has the

paperwork to prove. This is the prime example of what I to be, at

least, illegal, if not corrupt, if those are two separate things, of

activity going on. There is hard evidence of this. That moons people

are being defrauded, in my view. It's not good enough to say, well,

we just thought we would put this down instead. The specialify

kaition, for which people are paying, should have been put on the

roofs. It seems to me to be pretty black-and-white. You wonder what

that means in terms of all the other work that has gone on.

Whether or not it was what people were paying for. Ewan Aitken has

passed this information to the police's Specialist Fraud Unit. So,

we know that builders are being investigated. We know that

homeowners are feeling they have been ripped off. We know that costs

have escalated. There's more. Within the council we had heard the

relationship between some officers and builders was far too cosy.

There are allegations of trips to lap-dancing clubs. This year,

around 15% of the council's Property Conservation Department

have been suspended. The council says the suspensions are,

"precautionary". We also know the council's hospitality records, up

to 2009, have been lost. To find out more about this relationship

between council officials and builders, possibly even amounting

to corruption, I went back to our informant. He told me that the

system was wide open to abuse, including bribery. In theory, it

would have been easy to a add costs to the notice. The checks were lax.

The contractor would get money they weren't entitled to. Once, a

contractor offered me a free kitchen or a free bathroom. I

suspect, if I'd said yes, it probably would have happened.he was

throwing out a fishing line and seeing if I took the hook. I don't

know what anyone else was offered. It was a relationship that, I think,

We can't verify that what our surveyor is saying about the

builders and council officials is true. But Lothian and Borders

Police have now set up a fraud and corruption investigation. It even

involves claims that a surveyor, within the council's Property

Conservation Department, enjoyed holidays, paid for by a building

contractor. We believe this contractor was given work totalling

millions of pounds through the statutory notice repairs scheme. In

fact, the more I look at the Property Conservation Department,

the more worrying it seems. The most serious of all the allegations,

we believe the police are looking at, is whether some council

officials were taking bribes or a cut to give builders millions of

pounds worth of work. This could amount to institutional corruption.

How the council awarded contracts to builders is highly controversial.

In our investigation, one company's name keeps cropping up, Action

Building Contracts. We tracked down one job that Action were involved

with at Newtoft Street in Gilmerton. Clark Wilson bought his flat there

in 1998. In 200, the window above the Close came crashing down into

the stairwell. Action Building Contracts were brought in by the

council. The statutory notice instructed the builders to do some

extra work, but not things like new guttering and a new chimney, which

is exactly what Clark got, costing tens of thousands. You weren't even

told this guttering needed to be replaced or any of the roof work?

No, it had just been done. initial quote from Action was just

over �25,000. When he and his neighbours received the final bill,

the total cost of the building work had increased to almost �80,000. A

figure that brought on a feeling of sheer panic. It was like a bad

dream. You weren't going to get away from it. It's something that

you continually worry about, the final bill. It's just out of my

league. People just don't have that lying about. We have a dossier of

information on Clark's case, our experts agreed to take a closer

look. It would have been a simple job to re-point that crack and tidy

tup. They have been examining the extra work carried out and how much

it cost. What caught their eye was how the price of materials had

jumped by the time it appeared in the final bill. The final account

is your check out bill. I don't understand why something priced on

the shelve at a certain rate, at the checkout, in the final account,

is double the rate. It wouldn't happen in the supermarket, it

certainly doesn't happen in construction contracts. In my line

of work, I'd hang my head in shame if I ever had to report to the

client that a job had leapt up like that without any cost control.

According to our experts, Clark is the victim of gross overcharging.

His final bill from Action was almost three times the initial

quote. We have been investigating this story trout -- throughout the

summer, hearing concerns about price rice rises and alleged

corruption in the system. A few days ago we got hold of evidence

that finally proved that council officials were breaking their own

rules. That builders were making money out of contracts they

shouldn't have been awarded. Once again, Action Building Contracts's

name came up. This time, it was at Fowler Terrace in the Polwarth area.

Trevor Thompson runs a business consultancy. The statutory notice

arrived and the quotation seemed fair, but it didn't go quite as

he'd expected. The materials used are breaking down the stone work

rather than fix it. When Trevor Thompson looked at the break down

of cost he found evidence, he says, the company had hidden charges in

the final bill. What they've done, they have used this to fabricate

�15,000 charge for scaffolding for additional times because they said

the job was bigger than it was. This �15,000 is an additional cost

borne by the people here, for this project. Two other builders have

taken a look at these costs and the craftsmanship. They believe Trevor

and his neighbours have been overcharged by �40,000. They will

need to spend another �40,000 to fix all the problems. One of the

reasons why the contractor won this was, apparently, that the other

contracts had a heavy workload. Here we have an e-mail from the

council's representative saying that the other -- indeed the other

companies were in fact busy. This was a key bit of information I

could check out for myself. We were in a building recession in 2008,

when Action were awarded the contract. I've just come off the

MOBILE PHONE RINGS To a contractor who said he was available for work.

He was begging for work at the time. Another contractor said it was,

"jobs for the boys".he felt that some council officials were handing

out work to favourite firms rather than the most competitive tender.

In the space of two years, Action Building Contracts were paid nearly

�2 million by the council. Throughout this time, they weren't

on the council's approved list of frame work contractors. My gut

feeling is that somebody has made from this. Why would somebody

choose not to use the correct procurement system? There must be

some element in there of gain because it's either neglect, or

personal gain, I'm afraid. Action Building Contracts declined to

comment. As did the council on this case. As well as questions about

individual building firms, Ewan Aitken, the former council leader,

is worried that this scandal has undermined confidence in the

council itself. I have seen what appears to be strange decisions,

unexplained decisions, about who gets work, and that worries me

deeply. I've been asking questions, public questions, questions on the

public record about that and not got answers answers. Do you believe

that there are people on the pay roll on the City of Edinburgh

Council who are corrupt? convinced there is something that

has been illegal that has gone on and that has involved a few council

officers. He believes the situation is so serious that it warrants

radical action. I think we need to review every case, at least back to

2005, to say - how was the notice put in place? What was the decision

about what work needed to be done? How was that communicated to the

residents? How was the tender put in place and who got the work and

why they got the work? Until we do that, we won't have understood

whether or not people have paid money who shouldn't have had to

because because of the practice that has again on in the council.

think if you look back at the statutory notices served in the

last five years you would find hundreds were invalid. If

homeowners in Edinburgh looked closely at the justification for

why their notice was issued they might be shocked. In a statement

the City of Edinburgh Council said they commissioned an independent

auditor to investigate allegations of wrong-doing. They added that the

division -- division to have an independent investigation was, "a

sign of how seriously we take the complaints and concerns that have

been raised an our commitment to addressing them". A report updating

councillors about the audit or's investigation is expected to go

before the full council next month. With about 3,000 statutory notices

served every year and many home owners in Edinburgh now contracting

lawyers, this could become an expensive legal nightmare for City

of Edinburgh Council. But just how serious? I think it's, deeply

serious. It's tens of millions, potentially. The council officials

tend to think they are little Gods sitting on their pedestals, just

got every power in the world,. Just do exactly what they want. If you

look at all the scaffolding up around Edinburgh, it's all over the

place. So, it felt like it was a licence for them to print money.

I'm just jord Joe Bloggs on the street. Most people haven't been up

on a roof, or done anything like that in their life. You take it

from the experts are meant to be professionals who you can trust.

Not so long ago the City's statutory notice system was the

envy of other cities around Britain. That system is in a mess. In the

coming months, the council's own investigation will be reporting

back, hone homeowners will be taking legal action and the police

pursuing allegations of fraud and corruption. There's no doubt that

Edinburgh's buildings need to be con served, but what we've

uncovered could discredit the very system which was meant to protect

them. This is Edinburgh. This is the world World Heritage Site. It

has Historic Scotland, it has the National Trust. It has all the

important bodies that have established the policies and fee

loz loss fees for conservation in Scotland. For this to happen in the

centre of this, the centre of excellence, if you like, suggests

something terribly, terribly wrong. Do you think there will be